Hashrate dominance describes the proportion of a cryptocurrency network’s total computational power, or hashrate, controlled by a single mining entity, pool, or geographical region. It quantifies the distribution of mining power, a key security metric for proof-of-work blockchains.
Mechanism
Hashrate dominance operates by measuring the aggregate processing capacity directed towards solving cryptographic puzzles required to validate new blocks on a blockchain. A higher concentration in a single entity increases its probability of mining subsequent blocks, potentially granting it undue influence over transaction ordering and network censorship. This architectural vulnerability, often termed a 51% attack, poses a systemic risk.
Methodology
Analyzing hashrate dominance is a critical security assessment methodology for proof-of-work cryptocurrencies, particularly for institutional investors evaluating network robustness and decentralization. Strategic monitoring helps identify potential centralization risks that could compromise the integrity of the ledger, affecting the trustworthiness and long-term viability of the digital asset within a broader crypto investment framework.
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